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Last Updated: Monday, 14 June, 2004, 17:30 GMT 18:30 UK
Scandal over Ukraine steel sale
Russian steel worker.
The tender seemed to be written to favour local bidders
A company owned by the son-in-law of Ukraine's President Leonid Kuchma has won a tender to buy Kryvorizhstal, the country's biggest steel plant.

Viktor Pinchuk, who has interests in steel, energy and media, won the bid in partnership with Rinat Akhmetov, Ukraine's richest man.

Their 4.3bn-hryvnia (430m; $780m) bid won despite competition from Russian, US and European steel firms.

The tender has aroused vigorous protest in Ukraine and abroad.

Opposition politicians have accused Mr Kuchma and his associates of blatant corruption; Severstal, a Russian steel company that was seen as the likeliest winner in the tender, has said it will take the issue to court.

School for scandal

The sale of Kryvorizhstal is the latest contentious episode in Ukraine's much-criticised privatisation programme.

Observers had hoped that the sale would be conducted fairly, justifying the belief that the country was beginning to implement long-delayed economic reforms.

But the tender terms were plainly written to favour a local bidder: the winner had to have been a consumer of Ukrainian coke for the past three years, for example.

Interest from potential bidders was extremely high, since Ukraine's mighty steel industry is enjoying a purple patch at present.

It has resolved the energy-supply shortages it suffered in the 1990s, and is benefiting from rampant international metals demand.

Mr Kuchma achieves very low scores in opinion polls, and may not stand in October's presidential election, since in theory his term in office is due to end.

But analysts say he is seeking ways of holding on to power, either by amending the rules to allow him to stand, or by hand-picking his successor.


SEE ALSO:
Ukraine hopes for sell-off boost
12 May 04  |  Business
Ukraine MPs vote against reforms
08 Apr 04  |  Europe
Country profile: Ukraine
21 Apr 04  |  Country profiles
Kuchma gets chance of third term
30 Dec 03  |  Europe


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